[Federal Register Volume 64, Number 119 (Tuesday, June 22, 1999)] [Rules and Regulations] [Pages 33187-33188] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 99-15648] ----------------------------------------------------------------------- NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 712 Credit Union Service Organizations
Agency
National Credit Union Administration (NCUA).
Action
Interim final rule with request for comments.
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Summary
The interim final rule provides a grandfather exemption for real estate brokerage services if a credit union service organization (CUSO) was providing that service prior to April 1, 1998, and requests comment on that exemption and whether real estate brokerage services should be reinstated as a permissible CUSO service.
Dates
This rule is effective July 22, 1999. Comments must be received on or before August 20, 1999.
Addresses
Comments should be directed to Becky Baker, Secretary of the Board. Mail or hand-deliver comments to: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Fax comments to (703) 518-6319. Please send comments by one method only.
For Further Information Contact
Mary Rupp, Staff Attorney, Office of General Counsel, at the above address or telephone (703) 518-6540; or Linda Groth, Program Officer, Office of Examination and Insurance, at the above address or telephone (703) 518-6360.
Supplementary Information
Background
On November 19, 1998, the NCUA Board requested comment on proposed changes to part 712 of its regulations. 63 FR 65714 (November 30, 1998). Part 712 sets forth the requirements for FCUs investing in or lending to CUSOs. The NCUA Board is issuing a separate final rule adopting the proposed amendments. Although the Board did not request comment on the issue of real estate brokerage services, eight commenters objected to the Board's removal in March 1998 of real estate brokerage services from the list of permissible services. 12 CFR 712.6(b). The March rule allows a CUSO currently providing this service to continue until April 1, 2001. 12 CFR 712.9. In the alternative, the commenters requested that CUSOs currently providing real estate brokerage services be permitted to continue these services under a grandfather provision. The Board continues to have concerns with conflicts and the appearance of conflicts between real estate brokerage CUSOs and the credit unions such CUSOs serve. However, because the existing real estate brokerage CUSOs do not appear to present a safety and soundness risk, the Board is willing to provide a grandfather exemption for existing real estate brokerage CUSOs. This interim final rule amends Sec. 712.6(b) so that CUSOs engaged in real estate brokerage services prior to April 1, 1998 may continue to provide that service. Section 712.5 allows the Board to limit or discontinue a CUSO service if it has supervisory, legal, or safety and soundness concerns. The Board cautions that if a conflict between the real estate brokerage CUSO and the FCU's loan program arises, the Board may order the FCU to divest its investment in the real estate brokerage CUSO. The Board believes good cause exists to issue this provision as an interim final rule. The rule is relieving a regulatory burden and CUSOs engaging in this activity must either know that they are going to be allowed to continue or begin the process of closing down the business.
Amendment
Section 712.6 is revised to allow FCUs to invest in or loan to CUSOs engaged in real estate brokerage services provided the CUSO was engaging in that activity prior to April 1, 1998.
Request for Comment
The Board is requesting comment on the change made by this interim final rule providing a grandfather exemption for real estate brokerage CUSOs in existence prior to April 1, 1998. The Board is also requesting comment on whether real estate brokerage services
should be reinstated as a permissible CUSO activity.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities (primarily those under $1 million in assets). The NCUA Board has determined and certifies that this rule will not have a significant economic impact on a substantial number of small credit unions. The reason for this determination is that the amendment to the rule reduces regulatory burden. Accordingly, the NCUA Board has determined that a Regulatory Flexibility Analysis is not required.
Paperwork Reduction Act
This interim rule has no effect on reporting requirements in part 712.
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its actions on state interests. The CUSO regulation applies only to FCUs. Thus, the NCUA Board has determined that this interim rule does not constitute a ``significant regulatory action'' for purposes of the Executive Order. NCUA will continue to work with the state credit union supervisors to achieve shared goals concerning CUSOs with both FCU and state-chartered credit union participation.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedures Act. 5 U.S.C. 551. The Office of Management and Budget has reviewed this rule and determined that, for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, this is not a major rule.
List of Subjects
12 CFR Part 712
Administrative practices and procedure, Credit, Credit unions, Investments, Reporting and record keeping requirements.
By the National Credit Union Administration Board on June 14, 1999. Becky Baker, Secretary of the Board.
For the reasons stated in the preamble, the NCUA amends part 712 as follows:
PART 712--CREDIT UNION SERVICE ORGANIZATIONS
1. The authority citation for part 712 will continue to read as follows:
Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782, 1784, 1785 and 1786.
2. In Sec. 712.6 revise paragraph (b) to read as follows:
Sec. 712.6 What activities and services are prohibited for CUSOs?
* * * * * (b) Real estate brokerage CUSO. An FCU may not invest in or loan to a CUSO engaged in real estate brokerage services, except those in existence prior to April 1, 1998.
[FR Doc. 99-15648 Filed 6-21-99; 8:45 am] BILLING CODE 7535-01-U